LAUNCH OF STRATEGIC EXPANSION INTO EUROPE, MIDDLE EAST AND NORTH AFRICA; PARTNERS ESTABLISHED IN TARGETED GEOGRAPHIES WITH LEADERSHIP POSITIONS IN RELATED FIRE SUPPRESSION INDUSTRY
POSITIONED TO BENEFIT FROM EU’S SIGNIFICANTLY ADVANCED ENVIRONMENTAL REGULATIONS
JOINT VENTURE EXPECTED TO BE OPERATIONAL IN EARLY FOURTH QUARTER AND ACCRETIVE TO EARNINGS IN 2012
PEARL RIVER, NY – JULY 14, 2011– Hudson Technologies, Inc. (NASDAQ: HDSN; “Hudson” or the “Company”) announced that it has entered into a joint venture agreement with Europe-based Safety Hi-Tech S.r.l. (“SHT”) and the owners of the Italian engineering firm Banini-Binotti Associates (“BB”), for the development of reclamation, remediation and energy optimization services throughout most of Europe, the Middle East and North Africa. The European refrigerant aftermarket alone is estimated at over $700 million or approximately 70% of the U.S. refrigerant aftermarket. Additionally, due to the strict regulatory environment in Europe there is strong demand for the energy optimization and emissions reducing services Hudson provides.
The joint venture will create a new Italy-based company known as Hudson Technologies Europe S.r.l. Hudson and SHT will each own 40% of the new company and BB will own 20%. Using equipment and technology supplied and licensed by Hudson, the new company will market Hudson’s full suite of products and services, with an emphasis on Hudson’s energy optimization services. Hudson Technologies Europe will also provide reclamation support to SHT for the recycling and resale into the refrigeration market of refrigerants which are not only used in A/C systems but also used in most other fire suppression systems, including SHT’s. The parties have already made significant progress towards launching this joint venture, including the construction of equipment, facility layout and sourcing of refrigerants.
Hudson’s participation in this joint venture will further Hudson’s longer term growth strategy by:
- Positioning Hudson to meet increasing European market demand for energy optimization solutions that is being driven by high energy costs and a stringent regulatory environment
- Expanding Hudson’s opportunities to grow its reclamation business by taking advantage of Europe’s accelerated refrigerant phase out schedule; Virgin production of R-22 is currently 100% phased out in Europe and existing R-22 operating systems can only be serviced with reclaimed or recycled refrigerant that is presently selling at more than 3 times the price of R-22 in the U.S.
- Capitalizing on a very fragmented and under developed EU reclamation market which has few facilities able to meet Hudson’s purity and performance standards
- Providing immediate access to an established customer base and a well-developed infrastructure for the marketing of Hudson products and services in Europe, the Middle East and North Africa
The European Union (EU) is approximately five years ahead of the US in (i) the phase out of hydrochlorofluorocarbons (HCFCs), including R-22, (ii) carbon emission standards for greenhouse gases (“GHGs”), and (iii) efforts to increase energy efficiency. In the US, Hudson has been advancing in each of those areas ahead of government regulations and mandates, and in some instances ahead of market acceptance. Europe, however, has already created regulations and market incentives that Hudson believes support the offerings that the Company currently provides in the US. Consequently, Europe represents a promising and significant opportunity for Hudson, through the joint venture, to market and provide its services to industrial and commercial facilities.
Hudson’s ability to identify and capture energy efficiencies and savings in steam, air conditioning and refrigeration systems, typically the largest energy users in commercial or industrial facilities, we believe will enable the joint venture’s customers to save money, create reliable and verifiable emissions offsets and better comply with European government initiatives. Furthermore, whereas the U.S. phase out of Chlorofluorocarbons (“CFCs”) took place more than 15 years ago, many developing countries, which include most nations in the Middle East and North Africa, are only now undertaking the phase out of CFC-based refrigerants. We believe that these developing nations can benefit from Hudson’s phase out experience, providing long term opportunities for Hudson Technologies Europe to grow market share.
Kevin J. Zugibe, Chairman and Chief Executive Officer of Hudson Technologies commented, “This partnership with Safety High Tech and Messrs. Banini and Binotti advances our desire to identify markets for our services outside of the U.S. that will enable us to grow our market share. SHT’s existing fire suppression customers in Europe, the Middle East and Asia are primarily industrial customers and prime candidates for the services that Hudson Technologies Europe will provide. As government mandated phase outs and/or use restrictions of all refrigerants, including Hydrofluorocarbon (“HFC”), HCFC, and CFC-based substances create shortages and/or use restrictions of these gases, and as mandatory GHG reductions require the industry to reduce GHG emission, Hudson Technologies Europe will be in a position to provide reclamation and energy optimization services to the needs of SHT’s existing industrial customers. Additionally, our reclamation efforts give us access to the ozone depleting gases that have high value in the carbon credit market, a market that is currently significantly more active in Europe than in the U.S. We are excited by this opportunity and look forward to working with SHT and BB toward the success of this combined venture.”
Aldo Indovino, Safety Hi-Tech’s President, commented on the joint venture: “Hudson’s proven ability to provide proprietary on-site decontamination and energy optimization services makes this joint venture the perfect solution for the European market for many reasons. The opportunity to provide cost-effective energy optimization services, and the ability to access government incentive programs, will set this joint venture apart from others. We are also pleased to have Messrs. Banini and Binotti as part of this joint venture. They specialize in energy and environmental issues and will provide Hudson Technologies Europe with dedicated human resources to promote public awareness of the significant role of energy optimization for large comfort and process cooling systems as a part of the overall strategies to combat Global Warming.”
Stefano Binotti, one of the BB partners, commented on the new project, “Our participation in the Joint Venture represents a very significant moment for us. Both our American and Italian partners are companies with extensive knowledge and experience in their respective fields. We believe their combined technical and commercial expertise, synergistically integrated with our professional experience, will lead Hudson Technologies Europe to successfully develop its business in the European, North African and Middle Eastern markets.”
About Hudson Technologies
Hudson Technologies, Inc. is a leading provider of innovative solutions to recurring problems within the refrigeration industry. Hudson’s proprietary RefrigerantSide® Services increase operating efficiency and energy savings, and remove moisture, oils and other contaminants frequently found in the refrigeration circuits of large comfort cooling and process refrigeration systems. Performed at a customer’s site as an integral part of an effective scheduled maintenance program or in response to emergencies, RefrigerantSide® Services offer significant savings to customers due to their ability to be completed rapidly and at higher purity levels, and can be utilized while the customer’s system continues to operate. In addition, the Company sells refrigerants and provides traditional reclamation services to the commercial and industrial air conditioning and refrigeration markets. For further information on Hudson, please visit the Company’s web site at www.hudsontech.com.
About Safety Hi-Tech
Safety Hi-Tech (“SHT”) is a customer-focused supplier of advanced solutions for the Fire-Fighting sector which serves customers and markets through a network of integrated sales, production, research and technical services. SHT is a pioneer in clean agent fire suppression technologies, providing a proprietary, patented alternative to Halon, a chemical compound derived from hydrocarbons which has been identified as a significant contributor to the destruction of the ozone layer. SHT’s patented NAF S 125 and NAF S 227 Fire Extinguishing Agents and Systems have gained worldwide acceptance and recognition from leading environmental and technical authorities and have achieved significant market share in several geographies in Europe and other locations around the world. SHT’s Fire Extinguishing Agents have been included in the US Environmental Protection Agency’ SNAP List as acceptable Halon 1301 replacements and have been approved by internationally recognized testing laboratories, including Underwriters Laboratories Inc. and the Loss Prevention Certification Board.
About Banini & Binotti
Stefano Banini and Stefano Binotti are the owners of the engineering firm of Banini Binotti Associates (BB) and have been together since 1995. Since then, they have operated in Italy and abroad as consultancy suppliers for environmental and energy issues. The firm targets its services mainly to public companies and governmental institutions and generally acts as project managers and project developers. Through the support of specific skills, innovative perspectives and a professional staff, BB offers a full range of solutions and services in environmental engineering and sustainable development. Since the establishment of the firm, BB has operated as consultants to the Italian Ministry for the Environment Land and Sea. In 2008 they promoted the establishment of a Public Private Partnership between a number of Italian state-based universities and private companies. The firm now operates at both the national and international level, and is oriented to develop itself as an open network aimed at promoting a collaborative environment between the academic world, institutions and private/public companies.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements contained herein which are not historical facts constitute forward-looking statements. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, changes in the markets for refrigerants (including unfavorable market conditions adversely affecting the demand for, and the price of, refrigerants), the Company’s ability to source refrigerants, regulatory and economic factors, seasonality, competition, litigation, the nature of supplier or customer arrangements which become available to the Company in the future, adverse weather conditions, possible technological obsolescence of existing products and services, possible reduction in the carrying value of long-lived assets, estimates of the useful life of its assets, potential environmental liability, customer concentration, the ability to obtain financing, factors associated with the joint venture which include the ability of the parties to perform their obligations under the joint venture agreement, any delays or interruptions in bringing products and services to market, the timely availability of any requisite permits and authorizations from governmental entities and third parties as well as factors relating to doing business outside the U.S. including changes in the laws, regulations, policies, and political, financial and economic conditions, including inflation, interest and currency exchange rates, of countries in which the joint venture may seek to conduct business, and other risks detailed in the Company’s periodic reports filed with the Securities and Exchange Commission. The words “believe”, “expect”, “anticipate”, “may”, “plan”, “should” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
Investor Relations Contact:
John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)
Brian F. Coleman, President & COO
Hudson Technologies, Inc.